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How multinationals dictate oil, gas rules
By Guardian on sunday team
23rd September 2012
Did the media get Energy and Minerals Minister Professor Sospeter Muhongo wrong, or it was just another show of muscles by the multinational companies to the Dar es Salaam regime confirming how the country's politics would be shaped in future by the discovery of massive gas reserves and possibly oil?
Just twenty-four hours after local and international media reported that Tanzania's energy minister had ordered a review of all contracts with oil and gas exploration companies by November 30, saying some were not working in the country's interest and should be revoked, the reactions from the multinationals changed the tune forcing the government to refute its own story.
The global news wire services, Reuters, Bloomberg and major international newspapers quoting Tanzanian media, widely reported the move by the government causing shares to plummet in the FTSE 250-listed explorer, which fell more than 5.1pc to 608p by mid this week.
Ophir and its partner, BG Group, have made six consecutive gas finds off Tanzania and recently increased their estimate of total resources in place to between 13.5 and 21 trillion cubic feet – enough to sustain a liquefied natural gas projects to export the commodity on tankers.
Several companies have also made large discoveries off Tanzania such as Norway's Statoil and US giant ExxonMobil, and off neighbouring Mozambique, focusing attention on the division of spoils from a new East African hydrocarbons boom.
Both Ophir and BG Group mid this week sought to reassure investors that their contracts would not be affected by the review.
Earlier in September, this year, state-run Tanzania Petroleum Development Corporation (TPDC) delayed a licensing round for nine deep-sea oil and gas blocks previously set for this month until a parliamentary vote on a new gas policy in October.
This week, the Ministry of Energy and Minerals issued a statement saying that the media misquoted the minister, insisting that there was no plan to review or revoke the gas and oil contracts as reported by both local and international media outlets.
According to the ministry's advertisement issued by the permanent secretary, Minister Prof Muhongo last Saturday did not order any review of existing oil and gas exploration contracts.
Instead, the minister wanted the newly appointed members of the board of the Tanzania Petroleum Development Corporation (TPDC) to thoroughly read the copies of contracts to find out of if such contracts had provisions that did not sufficiently take into consideration national interests.
"The objective of passing through the documents is to find out if there are any shortcomings that should not recur in the new contracts that the government will enter in future with multinational companies in the sector," the advert read in part.
But those who attended the meeting insisted that what was reported was indeed what transpired during the launch of the Tanzania Petroleum Development Board with inside information claiming that the multinational may have pushed Dar es Salaam to deny its earlier announcement.
It was reported that the nine board members were handed bags containing the 26 existing production sharing agreements and told to start work right away.
East Africa has been a focus of hydrocarbon explorations after substantial deposits of crude oil were found in Uganda in 2006 and major gas reserves were discovered in Tanzania and Mozambique.
In June, Tanzania which already uses some of its natural gas to produce electricity and to power industry announced it had nearly tripled its estimate of recoverable natural gas reserves to up to 28.74 trillion cubic feet (tcf) from 10 trillion following recent major discoveries.
Opposition lawmaker Zitto Kabwe has urged the government to impose a 10-year moratorium on issuing new licences.
The reactions by both the multinationals, followed by the dramatic U-turn by the government raises one series question: Can Tanzania handle the international politics of oil and gas?
In many oil and gas producing countries, especially in the third world, multinationals control the politics indirectly, thanks to their invisible forces built by available natural resources in these countries.
These multinationals have the strongest lobby groups in the world, have backing by international media houses and above all are listed as the blue-chip companies in major global stock markets.
With Dar es Salaam discovering huge gas reserves as well signs of oil reserves, the country may celebrate hoping to achieve major economic gains, but there are more to the celebrations than we are made to believe.
From Parliament to Executives, the multinationals have their agents, who are influential people wwith well respected opinion at both local and international levels where they are paid hefty fees to safeguards the interests of the multinationals, according to one analyst who declined to be named.
"The minister has good intentions to serve this country, but our concern is the invisible forces which are at work day and night to ensure that nothing happens," the analyst who once worked at the World Bank told the Guardian on Sunday.
The analyst added: "If Tanzania doesn't stand firm, it will not benefit from the huge gas reserves or oil
… this is because of the dirty politics involved in the entire business of oil and gas sector."
In another development, some scholars from the University of Dar es Salaam have lashed out at what they termed ‘some ignorant politicians' who act as pimps of the multinationals, accusing them of trying to sabotage the newly appointed minister for energy and minerals.
"For your highly professional counter of the continuing, highly destructive political propaganda from the self centered young political populist from the opposition who is dissatisfied with the good management efforts been made by the new, highly professional Government force at the Energy and Minerals in correcting mistakes and ensuring it is the right policies are in place and well managed in order to effect a fair, win-win scenario for both the nation and foreign investors.", wrote Dr Antipas T. S. Massawe, one of the geologists from the University of Dar es Salaam in his response to a recent call by Honourable Kabwe.
Dr Massawe further wrote, "As if he (the young, self-centered political populist) was involved and a beneficiary in the conspiracies behind the bad contracts the new Government is trying to demolish for the sake of fair, win-win situation for all, the nation and the investors in the energy and minerals sector.
"I didn't expect any one from our members of parliament and especially one who is a total illiterate in the philosophical problems inherent in the way the global energy and mining sector operates and how these problems could be addressed in a developing country like ours in order to ensure that mistakes are corrected and the sector put back on the course of fair, win-win situation for both stake holders could stand up publicly with such unjustified objections to the efforts initiated by the New Government at the Ministry." Dr Massawe added in his written statement made available online yesterday.
In another written statement posted online jointly with Dr. Massawe's statement, one author wrote, "I also found Mr. Kabwe's idea of shelving gas exploration for ten years as logically, and economically naïve.
At best I would describe the proposition as a theory that contravenes the basic and natural economic principles that cannot be implemented in a needy nation like ours. Implementing this thought would be nothing short of economic suicide for a nation whose economy is extremely fragile."
"Mr. Kabwe's Transparency assertion reveals nothing short of tactical political, intimidation, representation and defense of the unknown interests. I would not go as far as describing the verbal assault as a self serving personal act of vengeance. However, the premise under which Mr. Kabwe's argument is based, and his pattern of attack, points towards just that" read part of the statement posted online by one, John Mashaka.
But, Kabwe's response to the statement was, "Dear Mashaka,
Thanks for this - well written, and to the point!"
All these demonstrate the tough battle ahead as Tanzania gears toward the recent huge discovery of gas and the future discovery of oil.
SOURCE: GUARDIAN ON SUNDAY
By Guardian on sunday team
23rd September 2012
Did the media get Energy and Minerals Minister Professor Sospeter Muhongo wrong, or it was just another show of muscles by the multinational companies to the Dar es Salaam regime confirming how the country's politics would be shaped in future by the discovery of massive gas reserves and possibly oil?
Just twenty-four hours after local and international media reported that Tanzania's energy minister had ordered a review of all contracts with oil and gas exploration companies by November 30, saying some were not working in the country's interest and should be revoked, the reactions from the multinationals changed the tune forcing the government to refute its own story.
The global news wire services, Reuters, Bloomberg and major international newspapers quoting Tanzanian media, widely reported the move by the government causing shares to plummet in the FTSE 250-listed explorer, which fell more than 5.1pc to 608p by mid this week.
Ophir and its partner, BG Group, have made six consecutive gas finds off Tanzania and recently increased their estimate of total resources in place to between 13.5 and 21 trillion cubic feet – enough to sustain a liquefied natural gas projects to export the commodity on tankers.
Several companies have also made large discoveries off Tanzania such as Norway's Statoil and US giant ExxonMobil, and off neighbouring Mozambique, focusing attention on the division of spoils from a new East African hydrocarbons boom.
Both Ophir and BG Group mid this week sought to reassure investors that their contracts would not be affected by the review.
Earlier in September, this year, state-run Tanzania Petroleum Development Corporation (TPDC) delayed a licensing round for nine deep-sea oil and gas blocks previously set for this month until a parliamentary vote on a new gas policy in October.
This week, the Ministry of Energy and Minerals issued a statement saying that the media misquoted the minister, insisting that there was no plan to review or revoke the gas and oil contracts as reported by both local and international media outlets.
According to the ministry's advertisement issued by the permanent secretary, Minister Prof Muhongo last Saturday did not order any review of existing oil and gas exploration contracts.
Instead, the minister wanted the newly appointed members of the board of the Tanzania Petroleum Development Corporation (TPDC) to thoroughly read the copies of contracts to find out of if such contracts had provisions that did not sufficiently take into consideration national interests.
"The objective of passing through the documents is to find out if there are any shortcomings that should not recur in the new contracts that the government will enter in future with multinational companies in the sector," the advert read in part.
But those who attended the meeting insisted that what was reported was indeed what transpired during the launch of the Tanzania Petroleum Development Board with inside information claiming that the multinational may have pushed Dar es Salaam to deny its earlier announcement.
It was reported that the nine board members were handed bags containing the 26 existing production sharing agreements and told to start work right away.
East Africa has been a focus of hydrocarbon explorations after substantial deposits of crude oil were found in Uganda in 2006 and major gas reserves were discovered in Tanzania and Mozambique.
In June, Tanzania which already uses some of its natural gas to produce electricity and to power industry announced it had nearly tripled its estimate of recoverable natural gas reserves to up to 28.74 trillion cubic feet (tcf) from 10 trillion following recent major discoveries.
Opposition lawmaker Zitto Kabwe has urged the government to impose a 10-year moratorium on issuing new licences.
The reactions by both the multinationals, followed by the dramatic U-turn by the government raises one series question: Can Tanzania handle the international politics of oil and gas?
In many oil and gas producing countries, especially in the third world, multinationals control the politics indirectly, thanks to their invisible forces built by available natural resources in these countries.
These multinationals have the strongest lobby groups in the world, have backing by international media houses and above all are listed as the blue-chip companies in major global stock markets.
With Dar es Salaam discovering huge gas reserves as well signs of oil reserves, the country may celebrate hoping to achieve major economic gains, but there are more to the celebrations than we are made to believe.
From Parliament to Executives, the multinationals have their agents, who are influential people wwith well respected opinion at both local and international levels where they are paid hefty fees to safeguards the interests of the multinationals, according to one analyst who declined to be named.
"The minister has good intentions to serve this country, but our concern is the invisible forces which are at work day and night to ensure that nothing happens," the analyst who once worked at the World Bank told the Guardian on Sunday.
The analyst added: "If Tanzania doesn't stand firm, it will not benefit from the huge gas reserves or oil
… this is because of the dirty politics involved in the entire business of oil and gas sector."
In another development, some scholars from the University of Dar es Salaam have lashed out at what they termed ‘some ignorant politicians' who act as pimps of the multinationals, accusing them of trying to sabotage the newly appointed minister for energy and minerals.
"For your highly professional counter of the continuing, highly destructive political propaganda from the self centered young political populist from the opposition who is dissatisfied with the good management efforts been made by the new, highly professional Government force at the Energy and Minerals in correcting mistakes and ensuring it is the right policies are in place and well managed in order to effect a fair, win-win scenario for both the nation and foreign investors.", wrote Dr Antipas T. S. Massawe, one of the geologists from the University of Dar es Salaam in his response to a recent call by Honourable Kabwe.
Dr Massawe further wrote, "As if he (the young, self-centered political populist) was involved and a beneficiary in the conspiracies behind the bad contracts the new Government is trying to demolish for the sake of fair, win-win situation for all, the nation and the investors in the energy and minerals sector.
"I didn't expect any one from our members of parliament and especially one who is a total illiterate in the philosophical problems inherent in the way the global energy and mining sector operates and how these problems could be addressed in a developing country like ours in order to ensure that mistakes are corrected and the sector put back on the course of fair, win-win situation for both stake holders could stand up publicly with such unjustified objections to the efforts initiated by the New Government at the Ministry." Dr Massawe added in his written statement made available online yesterday.
In another written statement posted online jointly with Dr. Massawe's statement, one author wrote, "I also found Mr. Kabwe's idea of shelving gas exploration for ten years as logically, and economically naïve.
At best I would describe the proposition as a theory that contravenes the basic and natural economic principles that cannot be implemented in a needy nation like ours. Implementing this thought would be nothing short of economic suicide for a nation whose economy is extremely fragile."
"Mr. Kabwe's Transparency assertion reveals nothing short of tactical political, intimidation, representation and defense of the unknown interests. I would not go as far as describing the verbal assault as a self serving personal act of vengeance. However, the premise under which Mr. Kabwe's argument is based, and his pattern of attack, points towards just that" read part of the statement posted online by one, John Mashaka.
But, Kabwe's response to the statement was, "Dear Mashaka,
Thanks for this - well written, and to the point!"
All these demonstrate the tough battle ahead as Tanzania gears toward the recent huge discovery of gas and the future discovery of oil.
SOURCE: GUARDIAN ON SUNDAY
